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Thursday, 23 February 2012

New Zealand Energy forecasts exit rate production of 3,000 boe/d for 2012

New Zealand Energy Corp.
(CVE:NZ)(OTCQX:NZERF) said Wednesday that based on its early
operational success in the Taranaki Basin of New Zealand's North Island,
it has forecast an exit production rate of 3,000 barrels of oil
equivalent (boe) per day for 2012.
In early morning trade, the company's shares rose 2.6 percent to $2.77 as of 9:47am ET.
The company said the guidance was prepared on the back of production
results disclosed Tuesday, as well as the planned drilling of eight net
additional wells this year.
The forecast also took into account the completion of a natural gas
pipeline, and the "continued performance in line with existing oil and
natural gas production" from its Copper Moki-1 and Copper Moki-2 wells.
Yesterday, the company said it had initiated an extended production
test of its Copper Moki-2 well, and started drilling Copper Moki-3, its
third well in the Taranaki Basin of New Zealand's North Island.
At the Copper Moki-2 (CM-2) well, it is producing 42.0 degrees of API
oil, and is currently flowing at a rate of 1,000 barrels of oil per
day, and 820 thousand cubic feet (mcf) of natural gas per day, New
Zealand Energy said.
In the last five days, CM-2 produced 5,318 barrels of oil and 4,158
mcf of natural gas. The well is tied in to the production facilities of
the Copper Moki-1 well, with produced oil trucked to the Shell-operated
Omata Tank Farm, located around 45 kilometres north of the Copper Moki
site.
The company said the oil sells at a premium to Brent and earns a
"top-tier operating netback" of approximately US$90 per barrel. New
Zealand Energy calculates the netback as the oil sale price less fixed
and variable operating costs and a five percent royalty.
The oil and gas producer said it has also advanced its plans to build
a natural gas pipeline, and once this is completed, it expects to begin
marketing its natural gas production.
The CM-2 well was drilled to a total depth of 2,080 metres,
encountering approximately 12 metres of net pay in the Mt. Messenger
Formation, a thick sequence of turbidite sandstones in New Zealand's
Taranaki Basin. The company also collected logs from the shallower
Urenui Formation while drilling CM-2, with analysis showing potential
for oil and gas production.
Meanwhile, the company has also started drilling CM-3, with the
expectation of releasing well results by the end of March. This well
will be New Zealand Energy's first to target the deeper Moki formation,
and it expects to collect information from both the Urenui and Mt.
Messenger formations as CM-3 drilling proceeds.
CM-1 continues to flow, and has been flowing from natural reservoir
pressure since December 2011, producing more than 44,000 barrels of oil
since the first August test last year.
The company also said Tuesday that it had entered into a farm-in
agreement with L&M Energy, under which it will earn an additional 15
percent in the Alton Permit, increasing its interest to 65 percent. The
Alton Permit covers 119,200 acres in the Taranaki Basin of New
Zealand's North Island, with an estimated resource base of 760 million
barrels and prospective recoverable resources of 69 million barrels of
oil.
New Zealand Energy is an oil and natural gas company focused on the
production, development and exploration of petroleum and natural gas
assets in New Zealand.
Its property portfolio collectively covers nearly two million acres
of conventional and unconventional prospects in the Taranaki Basin and
East Coast Basin of New Zealand's North Island.